Moog Inc 8-K, filed Apr 30, 2021
Moog Inc. (MOG-A)
8-K
2021-04-30
For: 2021-04-30
View Original
Added on
April 04, 2026
About this 8-K
Moog Inc filed this 8-K on April 30, 2021.
Items reported
- Item 2.02: Financial results
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||||||
(Address of Principal Executive Offices) | (Zip Code) | ||||||||||
(716 ) 652-2000
Registrant's telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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| Item 2.02 | Results of Operations and Financial Condition | ||||
On April 30, 2021, Moog Inc. (the “Company”) issued a press release discussing results of operations for the quarter ended April 3, 2021. A copy of the press release is included as exhibit 99.1 of this report.
The information in this report is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise be subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, except as expressly stated by specific reference in such a filing.
| Item 8.01 | Other Events | ||||
On April 30, 2021, the Company issued a press release announcing that the Company’s Board of Directors declared a quarterly dividend of $.25 per share on the Company's issued and outstanding shares of Class A common stock and Class B common stock. The dividend will be paid on June 1, 2021 to all shareholders of record as of the close of business on May 14, 2021. A copy of the press release is included as Exhibit 99.2 of this report.
| Item 9.01 | Financial Statements and Exhibits | ||||
(d)Exhibits.
| Press release dated April 30, 2021, announcing Moog Inc.’s results of operations for the quarter ended April 3, 2021. | |||||
| Press release dated April 30, 2021, announcing cash dividend. | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MOOG INC. | |||||||||||
| Dated: | April 30, 2021 | By: | /s/ Michael J. Swope | ||||||||
| Name: | Michael J. Swope | ||||||||||
| Controller | |||||||||||
Exhibit 99.1
Moog Inc. ▪ East Aurora, New York ▪ 14052 ▪ 716-652-2000
Press Information
| Release Date: | IMMEDIATE | Contact: | Ann Marie Luhr | ||||||||
| April 30, 2021 | 716-687-4225 | ||||||||||
MOOG REPORTS SECOND QUARTER RESULTS
East Aurora, NY -- Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial results for the second quarter ended April 3, 2021.
Second Quarter Highlights
▪ Sales of $736 million were down 4% from a year ago;
▪ Diluted earnings per share of $1.51 were up 2% from a year ago;
▪ Diluted earnings per share includes a one-time pension curtailment gain of $0.18;
▪ Operating margins of 9.8% were down from 11.0% a year ago;
▪ Effective tax rate of 21.6% compared to 19.2% a year ago; and
▪ $43 million cash flow from operating activities, up 12% from a year ago.
Fiscal 2021 Outlook
The company is providing projections for fiscal year 2021.
▪ Forecast sales of $2.84 billion;
▪ Forecast diluted earnings per share of $5.00, plus or minus $0.20;
▪ Forecast full year operating margins of 9.9%;
▪ Forecast tax rate of 24.0%; and
▪ Forecast $302 million cash flow from operating activities.
Segment Results
Aircraft Controls segment revenues in the quarter were $304 million, down 11% year over year. Military aircraft sales were $202 million, 15% higher than a year ago. Military OEM sales increased 33%, to $153 million, tied to very strong funded development programs and higher F-35 Joint Strike Fighter sales. Military aftermarket sales were down 20%, at $48 million, on weaker activity across the portfolio.
Commercial aircraft revenues were $103 million, 38% lower than last year’s second quarter. Sales to commercial OEM customers were down 39%, as wide body production at Boeing and Airbus were below last year’s levels. Commercial aftermarket repair and overhaul revenues decreased 34%.
In the quarter, Space and Defense segment revenues were $206 million, an increase of 7% year over year. Space sales were up 19%, to $88 million, the result of increased sales for NASA programs and integrated space vehicle products. Defense sales were mostly unchanged at $118 million. Lower sales of missile steering controls and security applications were offset by increases in sales of military vehicle and naval application products.
Exhibit 99.1
Industrial Systems segment sales in the quarter were $226 million, down 2% from a year ago. Energy product sales were down 23%, the result of a delays in offshore exploration activity. Simulation and test product sales were off 23%, tied to reduced demand for flight simulation pilot training products. Medical product sales increased 7%, to $67 million, tied to higher enteral feeding pump sales. Sales of products for industrial automation applications were up 5% but unchanged after allowing for foreign exchange movements.
Consolidated 12-month backlog was $1.9 billion, up 5% from a year ago.
“We are pleased with our performance in the first half of the year and looking forward to repeating that performance in the second half,” said John Scannell, Chairman and CEO. “We are reinstating guidance today after a 12-month hiatus. The second half of fiscal 2021 will mirror the first half, resulting in full year sales of $2.84 billion and full year earnings per share of $5.00, plus or minus $0.20. Our businesses continue to operate effectively, despite on-going COVID impositions. Market diversity and financial prudence have guided us through the last 12 months and will continue to be the core of our business going forward.”
In conjunction with today’s release, Moog will host a conference call beginning at 10:00 a.m. ET, which will be broadcast live over the Internet. John Scannell, Chairman and CEO, and Jennifer Walter, CFO, will host the call.
Listeners can access the call live or in replay mode at www.moog.com/investors/communications. Supplemental financial data will be available on the webcast web page 90 minutes prior to the conference call.
Moog Inc. is a worldwide designer, manufacturer, and integrator of precision control components and systems. Moog’s high-performance systems control military and commercial aircraft, satellites and space vehicles, launch vehicles, missiles, automated industrial machinery, marine and medical equipment. Additional information about the company can be found at www.moog.com.
Exhibit 99.1
Cautionary Statement
Information included or incorporated by reference in this report that does not consist of historical facts, including statements accompanied by or containing words such as “may,” “will,” “should,” “believes,” “expects,” “expected,” “intends,” “plans,” “projects,” “approximate,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,” “presume” and “assume,” are forward-looking statements. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current views with respect to certain current and future events and financial performance and are not guarantees of future performance. This includes but is not limited to, the Company’s expectation and ability to pay a quarterly cash dividend on its common stock in the future, subject to the determination by the board of directors, and based on an evaluation of company earnings, financial condition and requirements, business conditions, capital allocation determinations and other factors, risks and uncertainties. The impact or occurrence of these could cause actual results to differ materially from the expected results described in the forward-looking statements. These important factors, risks and uncertainties include:
COVID-19 Pandemic Risks
•We face various risks related to health pandemics such as the global COVID-19 pandemic, which may have material adverse consequences on our operations, financial position, cash flows, and those of our customers and suppliers.
Strategic Risks
•We operate in highly competitive markets with competitors who may have greater resources than we possess;
•Our new products and technology research and development efforts are substantial and may not be successful which could reduce our sales and earnings;
•Our inability to adequately enforce and protect our intellectual property or defend against assertions of infringement could prevent or restrict our ability to compete; and
•Our sales and earnings may be affected if we cannot identify, acquire or integrate strategic acquisitions, or as we conduct divestitures.
Market Condition Risks
•The markets we serve are cyclical and sensitive to domestic and foreign economic conditions and events, which may cause our operating results to fluctuate;
•We depend heavily on government contracts that may not be fully funded or may be terminated, and the failure to receive funding or the termination of one or more of these contracts could reduce our sales and increase our costs;
•The loss of The Boeing Company as a customer or a significant reduction in sales to The Boeing Company could adversely impact our operating results; and
•We may not realize the full amounts reflected in our backlog as revenue, which could adversely affect our future revenue and growth prospects.
Operational Risks
•Our business operations may be adversely affected by information systems interruptions, intrusions or new software implementations;
•We may not be able to prevent, or timely detect, issues with our products and our manufacturing processes which may adversely affect our operations and our earnings;
•If our subcontractors or suppliers fail to perform their contractual obligations, our prime contract performance and our ability to obtain future business could be materially and adversely impacted; and
•The failure or misuse of our products may damage our reputation, necessitate a product recall or result in claims against us that exceed our insurance coverage, thereby requiring us to pay significant damages.
Financial Risks
•We make estimates in accounting for over-time contracts, and changes in these estimates may have significant impacts on our earnings;
•We enter into fixed-price contracts, which could subject us to losses if we have cost overruns;
•Our indebtedness and restrictive covenants under our credit facilities could limit our operational and financial flexibility;
•The phase out of LIBOR may negatively impact our debt agreements and financial position, results of operations and liquidity;
•Significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could adversely affect our earnings and equity and increase our pension funding requirements;
•A write-off of all or part of our goodwill or other intangible assets could adversely affect our operating results and net worth; and
•Unforeseen exposure to additional income tax liabilities may affect our operating results.
Legal and Compliance Risks
•Contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting standards, and any false claims or non-compliance could subject us to fines, penalties or possible debarment;
•Our operations in foreign countries expose us to political and currency risks and adverse changes in local legal and regulatory environments;
Exhibit 99.1
•Government regulations could limit our ability to sell our products outside the United States and otherwise adversely affect our business;
•We are involved in various legal proceedings, the outcome of which may be unfavorable to us; and
•Our operations are subject to environmental laws, and complying with those laws may cause us to incur significant costs.
General Risks
•The United Kingdom's decision to exit the European Union may result in short-term and long-term adverse impacts on our results of operations;
•Escalating tariffs, restrictions on imports or other trade barriers between the United States and various countries may impact our results of operations;
•Future terror attacks, war, natural disasters or other catastrophic events beyond our control could negatively impact our business; and
•Our performance could suffer if we cannot maintain our culture as well as attract, retain and engage our employees.
These factors are not exhaustive. New factors, risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. Given these factors, risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictive of future results. We disclaim any obligation to update the forward-looking statements made in this report.
Exhibit 99.1
| Moog Inc. | ||
| CONSOLIDATED STATEMENTS OF EARNINGS | ||
| (dollars in thousands, except per share data) | ||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | April 3, 2021 | March 28, 2020 | |||||||||||||||||||||||
| Net sales | $ | 736,402 | $ | 765,277 | $ | 1,420,356 | $ | 1,520,120 | ||||||||||||||||||
| Cost of sales | 536,493 | 557,223 | 1,030,804 | 1,100,809 | ||||||||||||||||||||||
| Gross profit | 199,909 | 208,054 | 389,552 | 419,311 | ||||||||||||||||||||||
| Research and development | 30,453 | 26,688 | 58,461 | 54,896 | ||||||||||||||||||||||
| Selling, general and administrative | 105,131 | 107,251 | 204,734 | 205,618 | ||||||||||||||||||||||
| Interest | 8,629 | 10,251 | 17,049 | 20,483 | ||||||||||||||||||||||
| Other | (6,432) | 2,333 | (3,191) | 9,879 | ||||||||||||||||||||||
| Earnings before income taxes | 62,128 | 61,531 | 112,499 | 128,435 | ||||||||||||||||||||||
| Income taxes | 13,440 | 11,786 | 25,969 | 28,663 | ||||||||||||||||||||||
| Net earnings | $ | 48,688 | $ | 49,745 | $ | 86,530 | $ | 99,772 | ||||||||||||||||||
| Net earnings per share | ||||||||||||||||||||||||||
| Basic | $ | 1.51 | $ | 1.49 | $ | 2.69 | $ | 2.94 | ||||||||||||||||||
| Diluted | $ | 1.51 | $ | 1.48 | $ | 2.68 | $ | 2.91 | ||||||||||||||||||
| Average common shares outstanding | ||||||||||||||||||||||||||
| Basic | 32,146,247 | 33,434,420 | 32,110,365 | 33,972,635 | ||||||||||||||||||||||
| Diluted | 32,325,494 | 33,685,395 | 32,281,158 | 34,236,399 | ||||||||||||||||||||||
Exhibit 99.1
| Moog Inc. | ||
| CONSOLIDATED SALES AND OPERATING PROFIT | ||
| (dollars in thousands) | ||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | April 3, 2021 | March 28, 2020 | |||||||||||||||||||||||
| Net sales: | ||||||||||||||||||||||||||
| Aircraft Controls | $ | 304,361 | $ | 341,407 | $ | 591,135 | $ | 681,361 | ||||||||||||||||||
| Space and Defense Controls | 206,168 | 193,010 | 394,330 | 379,250 | ||||||||||||||||||||||
| Industrial Systems | 225,873 | 230,860 | 434,891 | 459,509 | ||||||||||||||||||||||
| Net sales | $ | 736,402 | $ | 765,277 | $ | 1,420,356 | $ | 1,520,120 | ||||||||||||||||||
| Operating profit: | ||||||||||||||||||||||||||
| Aircraft Controls | $ | 22,018 | $ | 34,701 | $ | 49,940 | $ | 73,293 | ||||||||||||||||||
| 7.2 | % | 10.2 | % | 8.4 | % | 10.8 | % | |||||||||||||||||||
| Space and Defense Controls | 26,652 | 24,652 | 49,698 | 49,934 | ||||||||||||||||||||||
| 12.9 | % | 12.8 | % | 12.6 | % | 13.2 | % | |||||||||||||||||||
| Industrial Systems | 23,813 | 24,775 | 43,711 | 51,574 | ||||||||||||||||||||||
| 10.5 | % | 10.7 | % | 10.1 | % | 11.2 | % | |||||||||||||||||||
| Total operating profit | 72,483 | 84,128 | 143,349 | 174,801 | ||||||||||||||||||||||
| 9.8 | % | 11.0 | % | 10.1 | % | 11.5 | % | |||||||||||||||||||
| Deductions from operating profit: | ||||||||||||||||||||||||||
| Interest expense | 8,629 | 10,251 | 17,049 | 20,483 | ||||||||||||||||||||||
| Equity-based compensation expense | 2,127 | 890 | 4,629 | 3,271 | ||||||||||||||||||||||
| Non-service pension (income) expense | (4,901) | 3,598 | (3,981) | 7,199 | ||||||||||||||||||||||
| Corporate and other expenses, net | 4,500 | 7,858 | 13,153 | 15,413 | ||||||||||||||||||||||
| Earnings before income taxes | $ | 62,128 | $ | 61,531 | $ | 112,499 | $ | 128,435 | ||||||||||||||||||
Exhibit 99.1
| Moog Inc. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (dollars in thousands) | ||
| April 3, 2021 | October 3, 2020 | |||||||||||||
| ASSETS | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | 90,110 | $ | 84,583 | ||||||||||
| Restricted cash | 902 | 489 | ||||||||||||
| Receivables, net | 922,092 | 855,535 | ||||||||||||
| Inventories, net | 636,580 | 623,043 | ||||||||||||
| Prepaid expenses and other current assets | 48,278 | 49,837 | ||||||||||||
| Total current assets | 1,697,962 | 1,613,487 | ||||||||||||
| Property, plant and equipment, net | 628,550 | 600,498 | ||||||||||||
| Operating lease right-of-use assets | 65,410 | 68,393 | ||||||||||||
| Goodwill | 860,239 | 821,856 | ||||||||||||
| Intangible assets, net | 114,820 | 85,046 | ||||||||||||
| Deferred income taxes | 18,808 | 18,924 | ||||||||||||
| Other assets | 20,051 | 17,627 | ||||||||||||
| Total assets | $ | 3,405,840 | $ | 3,225,831 | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
| Current liabilities | ||||||||||||||
| Current installments of long-term debt | $ | 71,652 | $ | 350 | ||||||||||
| Accounts payable | 175,061 | 176,868 | ||||||||||||
| Accrued compensation | 99,223 | 109,510 | ||||||||||||
| Contract advances | 256,080 | 203,338 | ||||||||||||
| Accrued liabilities and other | 225,915 | 220,488 | ||||||||||||
| Total current liabilities | 827,931 | 710,554 | ||||||||||||
| Long-term debt, excluding current installments | 896,955 | 929,982 | ||||||||||||
| Long-term pension and retirement obligations | 180,112 | 183,366 | ||||||||||||
| Deferred income taxes | 48,778 | 40,474 | ||||||||||||
| Other long-term liabilities | 113,607 | 118,372 | ||||||||||||
| Total liabilities | 2,067,383 | 1,982,748 | ||||||||||||
| Shareholders’ equity | ||||||||||||||
| Common stock - Class A | 43,802 | 43,799 | ||||||||||||
| Common stock - Class B | 7,478 | 7,481 | ||||||||||||
| Additional paid-in capital | 519,006 | 472,645 | ||||||||||||
| Retained earnings | 2,183,218 | 2,112,734 | ||||||||||||
| Treasury shares | (1,000,389) | (990,783) | ||||||||||||
| Stock Employee Compensation Trust | (85,034) | (64,242) | ||||||||||||
| Supplemental Retirement Plan Trust | (70,047) | (53,098) | ||||||||||||
| Accumulated other comprehensive loss | (259,577) | (285,453) | ||||||||||||
| Total shareholders’ equity | 1,338,457 | 1,243,083 | ||||||||||||
| Total liabilities and shareholders’ equity | $ | 3,405,840 | $ | 3,225,831 | ||||||||||
Exhibit 99.1
| Moog Inc. | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (dollars in thousands) | ||
| Six Months Ended | ||||||||||||||
| April 3, 2021 | March 28, 2020 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||
| Net earnings | $ | 86,530 | $ | 99,772 | ||||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||
| Depreciation | 37,622 | 36,962 | ||||||||||||
| Amortization | 6,436 | 6,676 | ||||||||||||
| Deferred income taxes | (1,187) | (1,346) | ||||||||||||
| Equity-based compensation expense | 4,629 | 3,271 | ||||||||||||
| Other | (3,115) | 5,674 | ||||||||||||
| Changes in assets and liabilities providing (using) cash: | ||||||||||||||
| Receivables | (47,697) | (42,208) | ||||||||||||
| Inventories | 9,301 | (49,467) | ||||||||||||
| Accounts payable | (5,088) | (14,891) | ||||||||||||
| Contract advances | 51,349 | 46,468 | ||||||||||||
| Accrued expenses | (1,799) | (9,920) | ||||||||||||
| Accrued income taxes | 12,691 | (14,040) | ||||||||||||
| Net pension and post retirement liabilities | 3,846 | 15,785 | ||||||||||||
| Other assets and liabilities | (16,151) | (2,032) | ||||||||||||
| Net cash provided by operating activities | 137,367 | 80,704 | ||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||
| Acquisitions of businesses, net of cash acquired | (77,600) | (54,265) | ||||||||||||
| Purchase of property, plant and equipment | (58,019) | (53,463) | ||||||||||||
| Other investing transactions | 1,895 | (3,706) | ||||||||||||
| Net cash used by investing activities | (133,724) | (111,434) | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||
| Proceeds from revolving lines of credit | 503,200 | 829,000 | ||||||||||||
| Payments on revolving lines of credit | (467,700) | (758,500) | ||||||||||||
| Proceeds from long-term debt | 39,800 | 4,300 | ||||||||||||
| Payments on long-term debt | (39,903) | (4,300) | ||||||||||||
| Proceeds from senior notes, net of issuance costs | — | 491,769 | ||||||||||||
| Payments on senior notes | — | (300,000) | ||||||||||||
| Payments on finance lease obligations | (1,042) | (412) | ||||||||||||
| Payment of dividends | (16,046) | (17,049) | ||||||||||||
| Proceeds from sale of treasury stock | 4,230 | 3,199 | ||||||||||||
| Purchase of outstanding shares for treasury | (18,844) | (191,961) | ||||||||||||
| Proceeds from sale of stock held by SECT | 274 | 14,278 | ||||||||||||
| Purchase of stock held by SECT | (2,559) | (6,209) | ||||||||||||
| Other financing transactions | — | (5,877) | ||||||||||||
| Net cash provided by financing activities | 1,410 | 58,238 | ||||||||||||
| Effect of exchange rate changes on cash | 887 | (791) | ||||||||||||
| Increase in cash, cash equivalents and restricted cash | 5,940 | 26,717 | ||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 85,072 | 92,548 | ||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 91,012 | $ | 119,265 | ||||||||||
Exhibit 99.2
Moog Inc. ▪ East Aurora, New York ▪ 14052 ▪ 716-652-2000
Press Information
| Release Date: | IMMEDIATE | Contact: | Ann Marie Luhr | ||||||||
| April 30, 2021 | 716-687-4225 | ||||||||||
MOOG ANNOUNCES CASH DIVIDEND
East Aurora, NY – The Board of Directors of Moog Inc. (NYSE: MOG.A and MOG.B) has declared a quarterly dividend of $.25 per share on the Company’s issued and outstanding shares of Class A common stock and Class B common stock. The dividend will be paid on June 1, 2021 to all shareholders of record as of the close of business on May 14, 2021.
The dividend represents a use of cash of approximately $8 million. Future declarations of quarterly dividends are subject to the determination and discretion of Moog’s Board of Directors.
Cautionary Statement
Information included or incorporated by reference in this report that does not consist of historical facts, including statements accompanied by or containing words such as “may,” “will,” “should,” “believes,” “expects,” “expected,” “intends,” “plans,” “projects,” “approximate,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,” “presume” and “assume,” are forward-looking statements. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current views with respect to certain current and future events and financial performance and are not guarantees of future performance. This includes but is not limited to, the Company’s expectation and ability to pay a quarterly cash dividend on its common stock in the future, subject to the determination by the board of directors, and based on an evaluation of company earnings, financial condition and requirements, business conditions, capital allocation determinations and other factors, risks and uncertainties. The impact or occurrence of these could cause actual results to differ materially from the expected results described in the forward-looking statements. These important factors, risks and uncertainties include:
COVID-19 Pandemic Risks
▪We face various risks related to health pandemics such as the global COVID-19 pandemic, which may have material adverse consequences on our operations, financial position, cash flows, and those of our customers and suppliers.
Strategic Risks
▪We operate in highly competitive markets with competitors who may have greater resources than we possess;
▪Our new products and technology research and development efforts are substantial and may not be successful which could reduce our sales and earnings;
▪Our inability to adequately enforce and protect our intellectual property or defend against assertions of infringement could prevent or restrict our ability to compete; and
▪Our sales and earnings may be affected if we cannot identify, acquire or integrate strategic acquisitions, or as we conduct divestitures.
Market Condition Risks
▪The markets we serve are cyclical and sensitive to domestic and foreign economic conditions and events, which may cause our operating results to fluctuate;
▪We depend heavily on government contracts that may not be fully funded or may be terminated, and the failure to receive funding or the termination of one or more of these contracts could reduce our sales and increase our costs;
▪The loss of The Boeing Company as a customer or a significant reduction in sales to The Boeing Company could adversely impact our operating results; and
▪We may not realize the full amounts reflected in our backlog as revenue, which could adversely affect our future revenue and growth prospects.
Operational Risks
▪Our business operations may be adversely affected by information systems interruptions, intrusions or new software implementations;
Exhibit 99.2
▪We may not be able to prevent, or timely detect, issues with our products and our manufacturing processes which may adversely affect our operations and our earnings;
▪If our subcontractors or suppliers fail to perform their contractual obligations, our prime contract performance and our ability to obtain future business could be materially and adversely impacted; and
▪The failure or misuse of our products may damage our reputation, necessitate a product recall or result in claims against us that exceed our insurance coverage, thereby requiring us to pay significant damages.
Financial Risks
▪We make estimates in accounting for over-time contracts, and changes in these estimates may have significant impacts on our earnings;
▪We enter into fixed-price contracts, which could subject us to losses if we have cost overruns;
▪Our indebtedness and restrictive covenants under our credit facilities could limit our operational and financial flexibility;
▪The phase out of LIBOR may negatively impact our debt agreements and financial position, results of operations and liquidity;
▪Significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could adversely affect our earnings and equity and increase our pension funding requirements;
▪A write-off of all or part of our goodwill or other intangible assets could adversely affect our operating results and net worth; and
▪Unforeseen exposure to additional income tax liabilities may affect our operating results.
Legal and Compliance Risks
▪Contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting standards, and any false claims or non-compliance could subject us to fines, penalties or possible debarment;
▪Our operations in foreign countries expose us to political and currency risks and adverse changes in local legal and regulatory environments;
▪Government regulations could limit our ability to sell our products outside the United States and otherwise adversely affect our business;
▪We are involved in various legal proceedings, the outcome of which may be unfavorable to us; and
▪Our operations are subject to environmental laws, and complying with those laws may cause us to incur significant costs.
General Risks
▪The United Kingdom's decision to exit the European Union may result in short-term and long-term adverse impacts on our results of operations;
▪Escalating tariffs, restrictions on imports or other trade barriers between the United States and various countries may impact our results of operations;
▪Future terror attacks, war, natural disasters or other catastrophic events beyond our control could negatively impact our business; and
▪Our performance could suffer if we cannot maintain our culture as well as attract, retain and engage our employees.
These factors are not exhaustive. New factors, risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. Given these factors, risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictive of future results. We disclaim any obligation to update the forward-looking statements made in this report.